live from new york where business never sleeps, this is "squawk box. good morning, everybody. welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. it is jobs friday. the forecasters are looking for an increase of 195,000 non-farm payrolls the unemployment rate is expected to hold steady all the way down to 3.8% let's look at the u.s. equity futures. despite the beginning of the tariffs being placed on chinese goods by the united states and on u.s. goods by china, you can see that the futures are down, but not by a lot looks like the dow is down by 41 points s&p is off by 2. nasdaq off by 3. this comes after a positive day for the markets yesterday. dow was up 181 points yesterday. s&p up by 23 the nasdaq up by 83.

let's look at what happened overnight. the hang seng was up by a half percentage point so was the shanghai. in japan, the nikkei was up by 1.1% let's look at what's happening early this morning the trading that's already taking place in europe for the most part you see green arroei arrows finally looking at treasury yields the ten-year, 2.58%. president trump launching the opening move in a trade war. the u.s. imposing tariffs on $3 billion of imports from china. the president threatening to extend the amount to 5$500

billion. eunice yoon has more from beijing. >> for about three hours or so we were on tender hooks wondering whether the chinese had a case of cold feet, then the foreign ministry confirmed it did retaliate with its own tariffs, immediately after the u.s. move. customs overwhelms already started collecting duties for 545 items worth $34 billion. the targeted goods include crops like soybeans, as well as cars earlier today. commerce ministry said it had no choice but to fight back against what it described as the largest trade war in economic history. the chinese move only escalates what many people fear could become a protracted trade war. president xi jinping has shown no signs of wavering

president trump appeared to double down on his stance during his visit to montana a lot of people now are wondering what happens next. we know that both sides will be imposing about 16 -- tariffs on about $16 billion worth of goods. those are in the pipeline. beyond that, there are a lot of people wondering how long is this trade war going to last and how can it be resolved it looks like there's little evidence to suggest the two sides will come together for some dialogue. that's making a business decision for many of the companies here very, very difficult. >> eunice, i've been hearing about some soft responses that china is taking. in some cases trying to dissuade chinese citizens from traveling to the united states, cut off tourism by saying look out for shootings in the united states or issues with customs, border officials. what else should we be on the

look out for >> yeah. that's been going on for weeks a lot of this soft measures that you had been describing or what people say are non-tariff measures and what the american companies have been concerned about are the -- what the chinese describe as other retaliatory measures that could take place. these are regulatory issues, they could be ensnared by them licensing approvals that could be slowed down there have been companies complaining about most custom checks at the ports. also fire inspections. they're fearing there could be environmental inspections and investigations as well all of these are possibilities that the american companies here are worried about if this trade war were to escalate further >> what about lawsuits i would have thought you would try to tie people up in court.

>> i think that that might be one issue, but the court system here is often viewed as a bit more biased towards the state. so this is not necessarily something that is at the top of the list of american companies here >> is the expectation that -- in terms of the total number, the way i read it, the $34 billion is just the beginning. it's so far from the end, and then the question is sort of where do the chinese take it is that your sense >> yeah. the $34 billion number was being discussed here quite a bit today. a lot of people were saying, like what you had said, 34 billion is a drop in the bucket when you think about the overall relationship between the two what is scaring people is just that nobody sees where the end is so will be 34 billion or 500

billion in the end how will the two sides get together and try to resolve things is the only way to resolve it by going through pain and hurting a lot of companies in the process before you get to the table? so it's just that big unknown that is making people -- companies as well as investors nervous. >> okay. eunice yoon, i imagine we'll spend a lot of time talking to you over the next day and weeks. cnbc reporters are spanning the country to cover the impact of the tariffs on the united states we'll hear more about kentucky bourbon and maine lobsters at 6:30 a.m. eastern time we do have the jobs number coming up. we did talk about this before. doesn't mean we can't talk about it again becky is here. the question was will we get a tweet from the president in about -- i'm looking forward to the jobs numbers, or -- >> if not --

>> how about, damn, i don't even want to see this thing at 8:30 i'm dreading this. or what about if he doesn't tweet at all >> does that suggest it's not as good >> i am watching andrew doing a bunch of trades in his account >> no, no. no >> my question is, let's say he doesn't tweet, which indicates it's a bad number, you go long or short >> this has always been -- >> because you have to -- >> you don't know. last month you didn't know if you get a hot market, does the number go up or down you can't trade on it. >> that's your defense of him doing that >> no. no how about goolsbee, trump should already be in a deep, dark duncan somewhere for that last tweet. this is so out of the norordinay

>> it is out of the ordinary >> it's the unhinged left. >> i don't believe that's what austin said. >> i withdraw the comment. that's my latest he objects to the judge -- objection. >> he goes objection >> then he gets to say what he wants to say -- >> and not take responsibility for it >> sustained you're right i withdraw all those comments. it's working it's been working all week it is good >> lawyer tricks >> yes the eu is reportedly preparing a new list of duties -- every time i say it i think of you. because -- you know. babies against the u.s. these would go into effect if president trump slaps tariffs on european cars. a new list is expected to include ketchup, which you missed the discussion of why it's not ketchup >> why >> it used to be both. ketchup initially was fermented

fish guts. but in the '77 70 0 s they chand it i can't summarize everything you missed >> i have to say it's nice to be back >> is there someone you missed more >> this is like children saying thi this >> my son asked me this. >> you love all your children. >> he's six. >> yes >> this is a way for me to stay young. according to an ft report, last mornt the eu fired back at washington with taxes on products from peanut butter to motorcycles after president trump imposed a levee on european steel and aluminum. >> let's tell you about stocks to watch this morning. sam shusung estimates profits r 5.2% for the second quarter.

the slowest rate in more than a year the tech giant sees the figure increasing to 14.8 trillion korean yuan. square has withdrawn its application for a banking license, the company plans to re-file the paperwork at a later date square applied last year for a special industrial loan company license which would allow it to take deposits that are federally insured. shares of price smart are down after the warehouse club's third quarter earnings missed forecasts. revenue growth was offset by higher costs as the company digested the acquisition of package delivery and e-commerce firm aeropost. >> we have some esteemed guests joining us we are counting down to the june jobs reports due at 8:30 a.m job ri john riding is familiar to our viewers. and you have nothing on john

lonske how long have you been at moody's? >> since 1985. when michael mill kkin was gett into high gear >> 33 years? >> 33, you're right. >> we were not even in business. >> the jobs numbers, i think, are getting more interesting because the absolute number may not be quite as interesting as now we're hearing that jobs are going untilled because they can't find people. people are moving to better jobs people feel comfortable leaving their current jobs what is the most important thing to see today >> will you be focusing on what happens to average hourly earnings >> is that the one >> you want to see a lower labor force participation rate one of the reasons why you have such a difficult time finding workers is because even if we're prime age americans, 25 to 54 years of age, you have a low

labor force participation rate these people have disappeared for whatever reason. either they're lazy or on drugs. i'm not sure what. >> opioids >> that's part of the problem. i talk to business owners, private equity guys, they tell me what a difficult time they have finding workers the wage they offer is $12 to 25 bucks. the average person can double their wage but they can't do it because they can't pass the drug test >> i heard that from trucking companies. the ability to prass a drug tes. >> the research by allen kruger on labor market participation shows the same thing, a large percentage of people who identify themselves as not participating in the labor force are on some form of pain

medication cause and effect, we can speculate. passing a drug test is a big issue. you look at the ism report, trucking is cited as a major constraint on activity as delivery delays are lengthening here >> that's unbelievable we discuss opioids here a lot, but not in a pure economic sense. this is like in a pure economic sense we're talking about here this is actually impacting the friday jobs numbers? >> yes well, you know, the -- in may, the last report, the number of unemployed exceeded the -- the number of jobs available exceeded the number of available employees. >> we'll check that again? >> yeah. the may number comes out next week we'll see more i think the unemployment rate

may fall today to 3.7%, which is down to levels we have not seen since 1969 >> i think that sounds good to have more people working, but when does it become a bad thing? >> it hasn't yet that's one of the surprising facts. we have this 3.8 unemployment rate the last time we were under 4% was the year 2000. and wage inflation is 4% today it's still under 3%. you get wage inflation up towards 4% again, then it becomes more of a -- more of a bad thing. >> you were talking to him >> yeah. >> you were not talking to yourself trump does that. trump did this trump did that >> even though we had rapid wage inflation, we had slow core pce price index inflation, less than 2%, thanks to a strong dollar. so we could offset only of these inflation pressures with a stronger dollar exchange rate moving forward

>> john, the other thing that's different between 2000, we will a war in productivity -- i'm talking to him >> yeah. >> just so we know we had a roar in productivity. now we've had a sluggish growth rate to productivity companies can't afford to pay more because of the impact on profitabilities. so slow wage growth is the best thing for this labor market. it's allowed the fed to move slowly it's allowed the unemployment rate to get down to these levels they won't panic they'll keep adjusting rates higher, but they won't panic >> once again we talk about -- we have not talked rates with you guys, i think they're tethered to that german bund >> below 2.8 i grow 100%. >> did you see the note the other day about the german banks because of the italian banks it's happening again i don't want to call it

insolvency supposedly in italy what they owe versus the percentage of gdp is worse than greece at the height of the crisis >> and much bigger numbers >> all the german banks are exposed to the italian yankbank. >> the eu pulled short of creating a european-wide or eurozone wide system of insuring each other's banks with the way they did qe so each country ended up owning its own. if that problem goes further, they'll have to really step in and finish the european bank guarantees >> you think >> yeah. what's strange about europe, even though we have these low interest rates in europe, the eurozone has been slowing down in part that's a response to an earlier appreciation of the euro exchange rate. it became too richly priced and

that hurt them globally. the same could happen here again if we have the stronger dollar >> i think the chefs and the winemakers should take over the government they're quick learners they could do it they're so good. >> you can't get a bad meal. you can't find one not great for me >> tariffs won't help this story for anybody. and that's the problem if this escalates, it will be bad for europe >> unless everybody goes to no tariffs and taxes. >> absolutely. >> that won't happen >> thanks to both johns, which sounds weird all my bathrooms in europe had two johns. weird. two -- you know what i mean? >> what? >> side by side. two toilets in every bathroom. >> that's not a toilet, that's a

bidet? >> i thought it was a water fountain really cold water. coming back, a new customer satisfaction ranking for fast food, restaurants and an expensive blunder involving the statue of liberty. "squawk box" will be right back. at crowne plaza, we know business travel isn't just business. there's this. a bit of this. why not? your hotel should make it easy to do all the things you do. which is what we do. crowne plaza. we're all business, mostly.

♪ >> we're all human chick-fil-a is once again the top-rated fast food restaurant if i could just find someone to help me get penelope a franchise. i've been talking to people -- >> chick-fil-a franchise you can't get it together? >> you know who i'm talking about. maybe you don't. that's the whole scott pruitt. that's the reason he's gone. >> yes >> god >> i hope our viewers are quicker than -- >> you had talked about chick-fil-a at one point i thought you were seriously

looking into it. >> the way you said it made me think -- >> i just said i wish i knew someone who could get my wife a chick-fil-a franchise. scott pruitt -- >> epa >> work with me. that's according to a survey by the american customer satisfaction index chick-fil-a scored 87 out of 100 points taking the top spot for the third straight squaurtequar. >> there's a separate chick-fil-a story. there's the thing about the founder -- >> yeah. >> he's very conservative. >> he said some things about equality i'm back >> you're back >> you're back with me >> now i understand. >> you have the progressive angle in there now i thought you would get the scott pruitt angle >> i withdraw.

>> sustained >> panera bread finished in second place with a score of 81, followed by subway with 80 arby's with 79. mcdonald's came in loss with a score of 69. the stock has been on a tear >> yeah. different situation in those other countries. it's like a mccafe >> in rome >> everywhere. everywhere they love mcdonald's it used to be ping-pong with china, that didn't bring us to the table. >> mcdonald's. >> will they do a fancy mcdonald's >> i would do middle of the road not too -- you want to keep it -- there's a revolutionary spirit to some extent.

>> you don't want it to look too -- >> yes >> a federal claims court judge ruled that the u.s. postal service owes 3$3.5 million for reproducing a sculptor's work on the lady liberty forever stamp the statue of liberty featured on the stamp is not the one based in new york city it's part of the new york, new york casino hotel in vegas postal officials admitted to the mistake a few years back the sculptor of the casino's repurr dur reproduction convinced the court that his work was distinctly different from the original. he was copying somebody else's statue -- >> nobody would know >> no. we flknew who it was. >> it's about money once again >> the guy ripped off somebody

else's statue and wants to get paid for it. >> made it as identical as they could to the real one. i don't think you can tell the difference >> apparently you could. >> all right coming up, we're tracking the impact of china's new tariffs on u.s. goods contessa brewer is in bourbon country where she often is what's coming up >> you have a lot of kentucky distillers bracing for this trade war hangover chinese tariffs, 25% slapped on american whiskey just at a time when american bourbon is making inroads overseas so what happens next i have that all ahead on "squawk box. you always pay your insurance on time.

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♪ welcome back, you're watching "squawk box" live from the nasdaq market site in times square ♪ >> good morning on this jobs friday morning also trade war of a friday morning. look at u.s. equity futures at this hour. let's show you what's going on things are getting marginally worse but not terrible dow off about 59 nasdaq opening off about 6 points s&p 500 looking to open off close to 3 points. recapping our top story, just after midnight the u.s. imposing

new tariffs on $34 billion of annual imports from china. president trump threatening to extend tariffs to all 5$500 billion of goods imported from the country. and china is not backing down. beijing says it has no choice but to fight back against u.s. bullying on trade. the nation imposing its own 25% tariff on more than 500 u.s. products, also worth 34 billion. so the trade war begins. cnbc's reporters are spanning the country to tack the impact of the latest round of tariffs. contessa brewer is in kentucky to talk bourbon. what can you tell us >> if you look around louisville, you have all these bars and restaurants based on bourbon. the bourbon business is booming overseas you have kentucky exporting 4$40

million worth of whiskey last year that's a 23% increase from the year before. in china american whiskey doubled its market share to 9% it is chipping away at scotch whiskey's dominance. china plays an important role in the growth of plants, smaller distillers are also trying to break into the market, and if they take a hit, so do the glassmakers, barrelmakers. >> when you take away the jobs, exporting them to spain, you are gut punching kentucky. >> so 65% of american whiskey

exports are now subject to retaliatory tariffs. >> i've heard over the years that it's been harder and harder to produce enough of the bourbon just because it takes so long to age in the barrels is the impact going to be felt at this point or will it be some time before you see this ripple through? >> a distiller told me yesterday we're planning for what the demand will be six years from now. so when you see a sudden trajectory of demand, it's hard to get the oak barrels that we need to make this actually bourbon and not just whiskey that to produce enough corn, to make the glasses, to bottle it so what they're planning for now is are people going to stop buying bourbon in china? if you have a $5,000 bottle of bourbon and have it with a 25% tariff, would you still be willing to pay $6,250 for the same bottle? the answer is they don't know how to plan for it, and the

uncertainty itself is causing anxiety. >> thank you very much let's get to nbc reporter v von hiller who is covering lobsters in maine. >> contessa is talking about the whiskey makers planning five, six, seven years out this is high season in maine along the ports for lobsters, where the planning is now and the need to sell is now. july 4th holiday is when that season begins to shift july and august are the high season when they are looking to send their exports out here in maine, about 20% of the exports of u.s. lobster went to where? it went to china with that 25% levee being laid down today, not only are they concerned about the long-term repercussi repercussions, and china looking to other exports, lobsters don't just come from the united states, but the concern is in

the short-term we talked to a couple distributors yesterday up and down the coastline here who said that they already had what were agreed upon deals ready to ship out lobsters live in their cages ready to send out, they said those have been canceled one for $40 million to shanghai. they said now it's a question of where does that $40 million commitment go, but where next week do the lobsters go? because the fishermen here up and down -- maine has done quite a job in regulating the industry, not allowing it to become too commercialized. we were talking with a fisherman up the road, second generation, fishing solo since he was 9. he's now 29 today. he said his concern is if there is not those reliable markets, this is too thin of a profit margin for these fishermen and the concern is for younger fishermen getting into this. they said there is no end in sight for this trade war when you look at an industry

here with about 12,000 people working within the fishery market in maine. it's a 1$1.5 billion industry here just this last year alone several hundred million dollars in lobsters went directly into china. so when you talk to these individuals, suddenly with the absence of the chinese market the question is where are those lobsters that they are fishing and building on reliable markets, where are they going? one of those distributors we were talking to, just this spring he said he put in a 1$1.5 million investment planning on his market continuing to grow. so with this situation unfolding he says he doesn't know whether that 1$1.5 million i investment he made was a good plan, especially since 20% of the market is now closed >> prices for lobster at this point, have they come down or is this just concern, anticipation about what might be to come?

>> they watch that market every day and watch that price i asked that question. i said when will we know the impact he said we look forward talking to you tomorrow morning once the tariff is levied because really the concern is for these fishermen, if you take into account, if they send out 50,000 pounds of lobster per boat a year, they said if it drops the price a dime, that's $5,000 if you're that 29-year-old fisherman, $5,000 for a family fishing business is quite significant. >> thank you coming up, when we return, we'll get you ready for this jobs report with an expert prediction at the top of the hour, plus the trade war with china is on. and heating up we'll talk about the impact on american soybean farmers soybeans are one of the biggest targets of the new chinese taxes. stay tuned, you're watching "squawk box" here on cnbc.

welcome back to "squawk box. "wall street journal" reporting that public listing pr ining prs for saudi aramco have stalled. an executive telling the "wall street journal" that everyone is almost certain it's not going to happen saudi officials have said the company and the country are not ready for the ipo, which could raise 1$100 milbillion and brin scrutiny to the oil giant. i was in saudi last year, the ceo of saudi aramco said they were ready, but clearly hinted in davos that it wasn't just that he had to be ready but also the government will to be ready. >> you're not surprised by this. >> i was always skeptical. i was skeptical they would do it soon i think they'll ultimately get there the question is how can they do it can they do an ipo outside of saudi? could it list here remember when trump was tweeting list it here versus london

all of that. yes, i've always been skeptical. but there's still a chance, just not any time soon. >> now, i will try to buy us some time here >> you are >> was that the trip where -- >> yeah. >> was that the trip where we took the picture >> you were trying to get the bic chu picture. >> i was >> i know that picture >> that's a good picture we'll give them time to get it >> we may not have it now. >> it's coming, sorkin >> you posed for it. you looked good. >> drop the picture. lovely picture >> sorkin of arabia. really good. >> while they look for the picture, we'll talk about what we've been talking about all morning, that's the beginning of the tariffs between the united states and china game is on at this point joining us now to talk more about the impact of the tariffs is william reich, former

president of the national foreign trade council, also a senior adviser at the center for stra tretegic and international studies. what happens next? we're in unchartered ter to eedy what's your guess? >> our president tends to have a single strategy in these cases which is to up the ante. he said if china retaliates, and they have, he will add more tariffs. so i think we're looking at a downward spiral of tit-for-tat retaliation. >> i keep trying to figure out, we've talked about how the situation with china has not been completely fair trying to figure out how the best way to address that would be is there a chance that this pays off. >> well, it's hard to see how frankly. people in the think tank community have been looking for an exit ramp we're having trouble finding one. generally speaking i think there's widespread agreement that the administration's diagnosis of the problem is

correct. china's engaged in unfair activities it's hard to see how tariffs will turn that around. some of the investment decisions that he's making will probably have an effect, at least on the future but tariff s we'll just end up hurting each other >> we talked to a lot of people who pointed out that both of these leaders need to be able to look like they are remaining strong in the face of this issue. they both need to look like they have a win that they can sell back to their domestic base. i guess that's where you get stuck trying to figure out the solution where both sides can look like they've won and saved face >> yeah. for most people this is like two 8-year-olds having a staring contest. whoever blinks first loses and unfortunately the real losers are consumers and manufacturers who get hit not only with increased tariffs on their inputs, and on the stuff they want to buy, but chinese

retaliation, increasing tariffs on exporters farmers will get hit while the two leaders worried about losing face not a productive process if you're convinced that the administration is right in its idea of what the problem is here, and that this is an unfair situation, what is the right way to address it? what we've been doing for years hasn't seemed to work or has it? >> the easy answer is we should have done things 10, 15 years ago that we didn'tdo we can't undo that time. it's also partly the fact that the chinese government has changed its policy in the interim. it didn't start out this way, but it ended up this way with xi jinping. we have to deal with it. personally i think there's two things three things to do one, the chinese respond best to coalitions if we go it alone, they dismiss us as part of the american plot

to encircle and destroy them if we get everybody, europe, japan, korea, australia, the rest of the world all telling them the same thing at the same time, they don't like to be an outlier. this administration is not really focused on building coalitions if they do, i think they'll have more success that's one thing second, if you impose restrictions on investment, as they say they're going to do, you can get a better handle on technology transfer which is part of the problem. so i think that's -- >> meaning what? they're not allowed to own u.s. companies? that sounds like what we already heard the administration and the treasury.talk abou department tt >> there will be restrictions on chinese purchases of u.s. companies. outbound there may be more restrictions on exports of u.s. technology to china. >> i would guess that american business would howl about that, too. >> depends on how broad it goes.

i think they probably will because the cutting edge stuff, the high-end technology is already controlled for national security reasons the question has come up what will you add what they're probably going to add are lower end, lower tech stuff that has already been released from controls because new generations have come in that are higher up basically and if you started doing that, semiconductor chips for example, you hit a lot of american exports, and a lot of money. >> all right at this point, no clear solution, and no easy end in sight. you would tell people just stay tuned? >> the other thing to do, i think, is recognize that the real battleground here is third markets. we are -- the president is trying to get the chinese to change their economy, change their economic structure they're doing what's good for them he said that himself several times. getting them to do what's not good for them is a heavy lift.

the real battleground, i think, is in third countries where the playing field is level we should be competing head to head with them in india, europe, latin america and africa and our government should be helping our companies do that. and they're not. that's the place to look >> great william, thank you very much appreciate your time today >> thank you coming up, we'll talk jobs in america with the ceo of the staffing firm top towel, which is a company focused on top talent in technology. as we head to break, a quick check of what's happening in european markets now you can see it's mixed not a whole lot moving there as we know, europe is close to the middle east. and as we bump out, can any of us forget -- can any of us forget this? >> oh, man >> can any of us forget the

contemplative, the -- >> thanks. thank you. >> william was still with us >> william is laughing >> appreciate that >> did you know it would conjure laughter >> i didn't. >> it was a nice shot. >> it wasn't just myself who took this picture. everybody who goes to this spot, they take a picture. >> but we only have yours. >> you were not even looking at the camera what were you thinking about were you thinking about -- >> i was dreaming. thinking of you, joseph. at&t provides edge-to-edge intelligence, covering virtually every part of your healthcare business. so that if she has a heart problem & the staff needs to know, they will & they'll drop everything can you take a look at her vitals? & share the data with other specialists yeah, i'm looking at them now. & they'll drop everything hey. & take care of this baby yeah, that procedure seems right. & that one too. at&t provides edge to edge intelligence.

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welcome back to "squawk box" this morning the countdown to the june jobs report, numbers expected at 8:30 eastern time we learned last month there are more job openings than workers to fill them joining us right now to talk about hiring in america is cofounder and ceo of tafdaly global network it is the largest network of completely remote workers in the world. i need a remote worker we need to talk about this but let's talk about this idea that there are literally more job openings than there are jobs at this point. is this something you're seeing in your world?

>> absolutely. we're seeing it in software development and tech those are the acute areas this is occurring in. if you look at blockchain, for example, we've seen a 700% increase in job postings just from last year >> these are -- when you say in blockchain, these are engineering jobs what kind of roles are we talking about? >> generally they're software development jobs so people who understand blockchain as a concept but also software development really coupling those two and how you develop blockchain technologies when you hear blockchain, it's just sort of this knnomenclature for a variety of concepts. there's different ways of doing blockchain. >> let me ask one specific question on that i know we have viewers out here who are blockchain obsessed and also looking for jobs. >> yes >> because this is such a new technology, it's not like people are getting degrees in blockchain so in terms of the experience that employers are looking for relating or relative to

blockchain jobs, what's that match or mismatch look like? >> so they're generally looking for software engineers who know blockchain really well that's a little bit difficult just for exactly the reasons you've said. what we've done is created an academy, a way to train great software engineers engineers who understand the fundamentals of software but can easily transfer over to becoming a blockchain engineer. you're seeing other folks also offering these types of education programs online. and that's becoming a sort of pervasive thing across the web >> these are very high end jobs. >> yes. >> what kind of pay are we talking about? >> well, i would say you're looking at anywhere from $80,000 to $180,000 a year depending on the location, depending on the skill set. >> what skill set are we talking about? >> we have people with ph.d.s

and also people who just graduated college and happened to be top of their class a software engineer is based on their ability to code. >> what about the roles farther down the chain, dare i say >> well, we don't focus on those types of roles we're really known as a high skilled marketplace. and we see an acute pain point within that area >> but all these people are freelance freelancers. >> they are. >> and working remotely from home for the most part >> yes >> and there's still not enough to fill the roles? >> on certain specific jobs. >> we were talking about truck drivers earlier in the hour. there's not enough people on that end and part of that is opioid addiction and trying to find the right kind of people >> this sounds like a skill set issue. >> but just in terms of trying to find the right people.

>> yeah. that's fascinating i wasn't aware of that specific problem. it sounds like there's multiple types of problems constricting the labor market >> there's not a lot of people left to fill remaining jobs. >> thank you it's great to see you this morning. thank you very much. when we come back, chinese tariffs are targeting the heartland taking aim at soybeans that's america's top farm export to china we're going to talk to an official from the farmers business network that is straight ahead it's jobs friday we're going to get predictions and analysis right after this. are you done yet?

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the trade war escalating

china striking back as u.s. tariffs go into effect the latest on what it means for your money is straight ahead the june jobs report is set to be released will the president tweet we preview today's big number and get you ready for the opening bell on wall street. plus your second half playbook for financials is now the time to buy the banks? a look at the sector and what you can expect for the remainder of 2018. as the second hour of "squawk box" begins right now. ♪ live from the beating heart of business, new york, this is "squawk box. >> good morning, everybody welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. let's take a look at the u.s. equity futures at this hour. this morning you will see that we are now down by about 77

points below fair value for the dow. nasdaq futures down by about 6.5 and the s&p futures down by 3.7. it's a little worse than we were an hour ago at this time it's all happening as the trade war is on between the united states and china the u.s. implementing tariffs on $34 billion on chinese imports china has responded in kind kind it has been forced to retaliate. president trump warned he may target far more than china has to retaliate against us with but there are all sorts of other measures that could take place we've heard about some of these soft issues trying to dissuade tourism. meantime, one of this morning's biggest movers is biogen succeeded in a mid-stage study when given at the highest

dosage that would be fantastic news because to this point, there hasn't been anything that could really stop the onset of alzheimer's. you're going to see right now biogen shares up by 11.6% on this news. this year' hurricane season may be less intense than originally anticipated forecasters at colorado state university now predict ten named store sto storms last year's season saw 17 named storms >> that's a tough business >> hurricane predictions especially when you're in colorado far away from any of the oceans but we always listen to krolss state. >> it's supposed to be nice tomorrow i wouldn't stake my life on it, you know what i mean >> i'm counting on it. >> and leisman's here. i want to talk to him in a minute but in purely simplistic terms with trade deficits, if you think about it, if you have a trade deficit of "x" and you get in a trade war, if you're importing so much more than

you're exporting to them, you can hurt them -- >> but that is the simplistic view of the thing. >> i can see how you get that. >> sure. i can understand that. >> if they're ahead of us by $300 billion and we keep -- >> already the customs agents in china are slowing down some of the imports and exports. that can affect the supply chain throughout >> there's no way it doesn't hurt everybody >> i know. unless you turn the screws and then get them to do what you want them to do with other things all right. we're less than 90 minute ace way from the release of the june jobs report. steve monitoring the twitter sphere in case we get a heads up on if it's a good or bad report. are you looking forward to the report today >> i am looking forward to it. you have to ask yourself how much i'm looking forward to it i was on vacation for four days. i came back from vacation for

this >> i did the same thing >> you drive to your vacation paying the high gas prices >> i drove to my vacation. >> is it in scott cohn's best business state or nearby >> i don't think massachusetts would qualify. >> no. although we think -- >> this might be it. we think there's a chance. >> you know, school's a big part of it. biotech and they do have tech there. >> route 128 >> there's a lot of talk about hq-2 of amazon going to massachusetts. >> you came to play. >> no. he came to talk about jobs >> thank you, andrew as far eastern mass as you can connect on cape cod. >> for fishing and stuff. >> true. and my mother-in-law and all kinds of fun things. there are a lot of questions surrounding this morning's employment report. are there enough workers to staff the growing economy? if not, will wages rise to

reflect job market strength and will trade wars have an effect here are the numbers we're looking for. payroll estimate of 195,000. that is strong plus or minus even 50,000 is a strong report. may payrolls were 223,000. don't read the headlines that said it fell it didn't fall 3.8% unemployment rate very low average hourly wages seem pretty strong at 0.3% maybe light for the private sector it doesn't matter. it's still strong. one way to think about whether there are enough workers is to look at the participation rate that's the population available for work this has barely budged in four years. economists say the trend, however, is decidedly down because of retirement. so the effect of the strong market looks to be keeping the participation rate up when it otherwise would fall maybe we'd get it to rise eventually meanwhile, hourly earnings have

shown a modest uptick. but not the gains that would seem in line with a low unemployment rate. now, trade wars, that's another thing going on there it could push jobs and wages the other way. here's some of the commentary we got from the ism manufacturing this week. respondents are overwhelmingly concerned about how tariff related activity will continue to affect their business it may be the economy overwhelms the effect of tariffs. i expect that for a couple months tariffs are too small to register at least at current levels or could be the effects are yet to come. >> so what did the -- what did you glean from the adp report yesterday? 177 versus 185 if you were writing an article summarizing that, would you say today's adp report badly missed expectations >> no. >> okay. >> i mean -- >> what if you were in -- i know, i know, i know but what if you were interested in click bait?

>> i don't write a lot for the -- anyway. that's another story i withdraw the comment >> you withdraw the comment. sustained. i withdraw the question. >> did somebody do that, joe >> i withdraw the question let's move on. >> will you tell me at the break if somebody -- >> yes, i will you can imagine. >> we're talking about 135, 140 million employed americans >> steve, it's a reason i brought it up -- which i wish i hadn't anyway, let's move on. andrew okay i want to continue our discussion about today's big jobs number. anthony chen is here from chase. good morning >> good morning. >> anthony, what are you expecting today? >> i'm looking for about 175,000. i'm looking for the unemployment rate to stay unchanged. >> is that exciting to you >> i think it's pretty exciting

given the federal reserve says we need 80,000 each month. that's almost twice as strong. there are hidden numbers of people not in the labor force that could creep back in >> what are they doing >> they're either at home taking care of a relative or maybe not feeling so well or they're retired. but a harris poll last year indicated that even people that retire, 56% of them want to at least work part-time the way the household survey measures it, even if you work a couple of hours a month, you're employed >> that's the question what is the cost of not golf >> well -- >> not golf. in other words, if your alternative is to play golf or to work, what does it take and i know that's not true for everybody -- all you people at home in florida right now, ask yourself that question >> we had a fella on in the last hour that employs freelancers that work from home.

we've heard of these stories they surf or golf in the morning and then work from home all day. >> they should be counted in the data they should show up in the participation rate you know, we don't know -- and i know the bls is trying to adapt to the -- >> karen is waiting patiently. karen, i want to hear your number but also understand what you think the goldilocks number is we always say what's good news is bad news, what's too hot, what's too cold. tell us. >> as steve said, anything around plus or minus 50, that would be great my name is over 200,000. i think we'll see over 200,000 but the goldilocks number is going to come down to the wage growth because we remember that a little bit of higher wage growth spooked investors back in february so i think the wage growth number as long as it's good but not too good, that's the number we'll have to look at to see -- >> good but not too good >> what is that?

0.3% what would be -- >> 0.3% has seemed to be a good number investors seem to be good with that number. it's ticking forward in year over year. 2.7%, investors are comfortable with that number we start to see things hotter than investors think we're seeing inflation creep in. but i think we'll probably get that >> okay. let's say you're right let's say we get -- let's go high though. let's go 225, 250, 275 let's get ambitious here then does the fed say that's bad news >> i don't think the fed is going to say that that's bad news how can you say job growth like that is bad news the fed is just going to say it's an affirmation of a strong economy. but unless we see the numbers really moving into the inflation, into the pce, the fed's preferred measure, i don't think the fed is going to think that's a bad thing how could you think that many jobs being created -- and especially small business. small business has been the target of deregulation

these are good jobs. >> andrew, could i say two ways to answer that. the first one is i think the fed is more focused on the unemployment rate than the job growth numbers i think it feels there are some questions about some of these people on the sidelines that anthony was talking about. the other thing is, i think our new fed chairman is a little bit more, i will shoot when i see the whites of their eyes when it comes to inflation rather than preemptively acting on the theory of the wage price spiral i'm interested on anthony's take on that right now. it's different from yellen >> it's a lot different. he's more pragmatic. even if you get a 0.4% jump in hourly average earnings, that's still 2.9% the fed wants those wages to be rising between 3% and 4% we did get a little spooked at 2.9% we've seen that number before. >> one thing is that number there. yellen used to talk about it i don't know that powell has

but the right way to think about non-inflationary wage gains -- right? we keep using this term like somehow rising wages is a negative it's not those two numbers -- maybe karen wants to comment on those -- are non-inflationary wage gains. it is okay for wages to goup along with the inflation rate and productivity rate nap gives you a 3% to 4% window of wage gains. >> karen, you get the last word. >> right productivity is the key. and i think we are going to start to see some productivity i'm expecting 2% productivity in the second quarter we haven't seen that number in a long time. that's good. that's non-inflationary wage gain due to productivity that's because of the capex boom we're seeing haven't been talking about it a lot, but companies are going out there and they're investing capital expenditures on the key to that productivity >> okay. we're going to leave the

conversation there anthony, thank you for being here and karen, thank you >> karen cavanaugh no relation. >> no, sorry the other kavanaugh. i'm with a "c," not a "k." >> what's the difference do you know? >> i think the "k" is the real way. i'm the rogue way. i think "k" is the official way. >> okay. because i -- you know, god forbid he doesn't do it the real way and andrew finds out that might be enough for them to filibuster it. >> i'm the wrong one >> that would have right there to disqualify him. anyway, karen, thank you when we come back this morning, with the fed expected to continue rate hikes in 2018, are financials a safe bet for the rest of the year your second half playbook on financials is straight ahead up next though, new tariffs on autos are in effect. phil lebeau joins us with a

preview. >> it's only been a couple of hours, but we are already hearing from some automakers, they're going to be passing along the impact of those tariffs in terms of higher sticker prices who's doing that and what impact it would have on sales that story when "squawk box" returns. this wi-fi is fast.

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imported and exported between the united states and china is now in effect. phil lebeau joins us with more on this. this was well telegraphed, but what was now it's actually in effect >> you got two choices you either eat the cost which is going to hurt your margins or you pass along the cost in terms of higher sticker prices in the showroom and we're seeing an indication that some automakers are doing the atter, some are doing the former here's what we're seeing let's start off in terms of u.s. exports to china remember, the tariff is 10%. they tacked on another 25% it'll be 35% last year more than a quarter million were shipped from the u.s. over there. ford has said that it is not going to change the sticker price on the vehicles that it exports to china it's going to eat that cost. that'll be reflected in the margins from over there. what about bmw it is the largest exporter of vehicles from the u.s. to there. they're coming out of south carolina more than 100,000 sent last year

to china the company issuing a statement saying bmw china will not be able to completely absorb the duty increase for u.s. imported models we are currently calculating related necessarypricing increases. so they're making it clear, it's going to happen in some fashion. at present, we will stick to the current msrps of the u.s. imported products. the new msrps will be indicated at a later stage what about the vehicles we get here in the united states built in china it's not a lot of them there are three models right now where they're making up 58,000 of the vehicles that were brought in from china last year. the volvo s-60 is one of those volvo has indicated it's not sure what it will do when it comes to pricing changes or changes due to the new tariffs in effect. that 25% on china vehicles which used to be 2.5%. right now general motors is the biggest importer of vehicles from china

we're talking about the buick envision there are more than 40,000 of those that were imported to the united states last year. 41,000 of the buick envisions. general motors said they are going to assess how to handle those costs. most believe we are going to see higher sticker prices in showrooms if you see this trade war continue to spread not only between u.s. and china but between the u.s. and europe. that's the greater concern for the auto industry. guys, back to you. >> phil, longer term, i would guess that some of these manufacturers are trying to figure out how to manufacture the goods in other places. right? particularly for somebody like bmw who's not based here. >> not as much as you think because they've already made their commitments. here's the concern for them. okay, what if you're worried about exports being taxed in china at a higher rate over the next 10 to 15 years? then it would make sense to say,

okay let's build more in china. well, they're not sure if that's going to change in a month or two. or that you see president trump and the president of china saying, okay, we've worked things out we've come to an agreement in three months >> so they're anticipating this is still a negotiation >> most anticipate that. most anticipate that >> great phil, thank you. >> you bet >> all right china's 25% tariff on soybeans also in effect right now joining us with more on this is farmers business network ceo i didn't know there was a farmers business network and try to figure out exactly what you do. i'm fascinated sort of excited about the kind of company you have. it may go public some day. if you could start with that and explain how you guys operate, the way i see it, dupont and monsanto control a lot of what goes on in agriculture

this is kind of getting together using the most modern technology and ai and everything else to try to help individual farmers bond together to get the best deal that they can for what they do is that about right? >> that is very close. you know, we empower family farms. so we use machine learning, ai technology we've built what we believe is the largest data base in all of agriculture. so they can have a level playing field with these vendors, in many cases, who are consolidating with each other, rising input prices. farmers are getting squeezed on all sides. really our goal is to make the family farm more sustainable with technology in the long-term and help farmers to compete in all parts of their operation. >> so you're in a good position to judge how this soybean tariffs are going to play out. and i think if we got it right, since the chinese will be

charging a tariff on soybeans, our beans have to go down to a certain level to where you add in the tariff and have to be competitive with brazil, for example. that will be bad for awhile, but the real problem is permanent infrastructure or relationships built in the meantime. is that how we should view this? >> yeah. i think there's short-term and long-term implications you know, in the short-term, it's important that, you know, to have a cool head about it not to have an emotional reaction if you're a farmer. a lot of the downside has been priced in. i think we've had a 20% reduction. farmers business network did a poll recently yesterday, actually, where we learned 45% of our farmers have already priced their soybeans. there's risk on the table in the short-term in the long-term, you're right about these structural changes that recently china lifted

tariffs on other countries in asia to encourage. what it means is this is one of our biggest customers. over the long-term, they may seek over sources of supply. that has real implications for our farmer base. >> i was looking for the number that i saw where your revenue a couple years ago and your current revenue. it was a staggering number, the kind of growth you're seeing at your company do you have those numbers handy? i don't see them in the notes here i want to tell sorkin about it >> we don't disclose the financial numbers. but we're growing at a significant pace right now we're up to 25 million acres of farms in our system. we're adding up to a million or more acres every single month right now. so we are one of the fastest growing companies in the sector in terms of the data we're collecting and we started monetizing our business services which include

providing these inputs to farmers. that's growing very fast as well >> and it's something that i'm sure that monsanto and dupont don't like you very much, do they >> we are not popular in the ag space with big ag players because we share price information. we make it difficult. >> it says -- i think it's a fortune article. that you expect revenue of $200 million this year up from $72 million last year. $72 million to $200 million. anyway, you don't have to confirm that but thank you. thanks for your insight today on your company and on the effects of the tariffs thank you. >> thank you coming up when we return, financials in the second half of the year names you need to watch. and then former australian prime minister kevin rudd is going to join us to discuss the impact of those new tariffs on china as the trade war gets underway. taking off just after midnight last night "squawk" returns after a break

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♪ good morning, everybody. welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. among the stories that are front and center this morning, ford sales slump in china is growing. for the first a of the year, sales were down 25%. that's the biggest first half slide since ford began operating in china back in 2001. industry watchers say a lack of new models is a key factor another company reporting a drop in sales is phone maker htc. its sales fell by nearly 68% in

june compared to a year earlier. they have fallen in popularity that's because rivals like apple and samsung have much bigger marketing budgets and more nimble manufacturing operations. as we've been telling you, the june jobs report is out in about an hour's time we'll also get new trade deficit figures. the may trade deficit is expected to come in at $42.6 billion. as netflix and amazon search for new users abroad, they're looking at india as a big market releasing its first original indie series for the country it's based on a novel there by vikr vikram chandra also a series featuring a group of prominent critics tasked with finding new talent in america. it's the fourth original show

netflix has made for india aggressive play from the companies both of which entered india in 2016 becoming necessary. amazon prime video and netflix had trailed in the nation. for more on this story and other original content, go to cnbc.com and check it out there also by the way, worth noting, one of the reasons that, frankly, comcast and disney have been so interested in sky and the fox assets is india. if you could capture india and that's the one piece of that puzzle that everybody says is the true sort of jewel in the sort of value chain because it's almost impossible to replicate >> and build up. >> yeah. all right. if there is a sector that loves rate hikes, it's the banking sector and probably loan sharks, i guess. so what can -- if there's a

difference what can investors expect in the second half of 2018? wilfred frost is here with more. >> hi, joe a 16% increase in aggregate capital in the recent stress tests. this means the banks now have an average dividend yield of 7.2% and a cashback yield of 9% when buybacks are included. this is more than double the level of the broader s&p 500 takes the cashback yield higher than crisis levels the average boost in capital return was 16% wells fargo topped the list in terms of increases with regionals like suntrust close behind which only received conditional approval managed to increase returns by 10% and 1% respectively all of this should act to support prices however, banks have performed

poorly in 2018 for two reasons a flattening yield curve and in the prior 18 months. the other standout aspect particularly since april has been small cap performance over large cap. as for the agenda for the rest of the year, first is the shape of the yield curve earnings starting next friday the 13th of july and that is miscellaneous questions like when will lloyd blankfein hand over the reins at goldman sachs. alongside most of the market just a little bit lower. but not too significant. >> okay. joining us for more on all of this -- you're staying. don't go anywhere. o'neil's equity research principal. good morning >> good morning. >> anything you disagree with there? >> no, no. generally we feel pretty good about the group.

there are cross currents on the plus side still raising short-term rates that's probably the most important factor right now as you noted about a week ago now we got probably the most significant capital return dynamics we've had in basically the past decade. so that's good additionally, you've got a very benign credit environment. so a lot of things to like. >> what do you do with goldman sachs and morgan stanley. >> those are interesting ones. i don't think we've seen this conditional non-objection in which companies especially more than one company fell below the regulatory thresholds but we're still able to return capital to the extent that they have in the past i think this cycle has been one of relief. it could have been much more punitive so generally good dynamic there. >> he mentioned the idea of handing over the reins at goldman. does that factor into your thinking one way or the other? >> i'd rather have our analyst

jeff harte go with that name a lot going on, definitely >> on the goldman thing? i think the bigger question for me is we note seoul molomon is to be ceo. but it's more interesting to know who gets promoted when david gets promoted. someone like steven who is running all the consumer lending businesses a signal for the future. we'll see about that short-term earnings is going to be fascinating q1 there were lots of positive tail winds behind the earnings whether it was tax cuts. whether it was a bit more pickup in volatility. q2, i'm not sure we've got all those tail winds to come it might be a tougher set of earnings relative to expectations >> you know, so the margin dynamics should still be pretty good as long as they're raising short-term rates, we're in good standing there

the question is always deposit pricing pressures or overall costs. i think we're in good shape there. then credit remains very benign. for the most part we're in good shape. one thing we haven't seen a lot of action on is overall loan growth for the industry. that's been disappointing for the better part of the last few years. >> what's the one bank you like the most >> i'd say wells fargo >> wells fargo >> it's been a chronic underperformer recently. but i think there are three factors at work. one, they were clearly by far the largest victor in this most recent c-car so these guys if you can spin the asset cap positively, it's they're depositing a ton of capital. >> so their stock's at $55 right now? >> yeah. >> give it 12 months what's fair value? >> my best guess is mid-60s.

these guys have been very transparent about what they need to do on the cost side given the fact there's not a lot of revenue growth right now >> reputational factor >> no question about that. but frank tli these issues they're contending with, couple years old now. i think we've moved beyond the drum beat of a weekly news flow of problematics. now it turns to a cost story and valuation story. >> scott, thank you. wilf, thank you for waking up early. >> pleasure as always. >> have you seen that big angry baby trump balloon >> extraordinary i can't believe it's been approved in that way >> well, it's a free speech thing according to the mayor >> yeah. well, i'm looking forward to being in london to cover that. >> will you get a selfie of that with me? >> i'm tall, but i don't think i'm that tall. but maybe from afar. >> okay. thank you. when we come back, kevin rudd will join us talking china

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brazilian superstar neymar santos jr. known as neymar has spent almost 14 minutes of the world cup rolling around on the ground but i don't think that is really specific to him. so kfc of south africa put out this ad poking fun at the soccer player it shows a player flopping dramatically, then rolling through the city cameramen chasing after him until he reaches a kfc restaurant once there he pops up to give his order to a smiling cashier >> it's fun. >> it is it's a stretch it's a stretch, but, i mean, there is some of that. you know -- >> dramatic. >> seconds later the guy scores a goal and does a back flip. >> all good. >> then gets the kfc >> it's all part of the game all right. the united states officially imposing new tariffs on $34 billion of chinese imports

president trump also threatening to extend those tariffs to all $500 billion of goods imported from the country 37 -- thank you for being here >> good to be here >> you have a very innate knowledge of the chinese you know how they react to things you know what's happening. so what's your read on what has just happened with these tariffs taking place from both nations >> what worries me about where we've got to is trade wars are easy to start, really hard to stop because you go from trade to politics real quick. and that's where we've got to with this one. and so from the chinese perspective, the politics of backing down are almost impossible to swallow even within an authoritarian political system so what i worry about is where this now translates to so for xi jingping domestically to turn around to this saying we

got it wrong all the time. those americans have been right from the get go. we've got to accept the trump formula. it's bad internal politics for him. and the final point is this. they kind of pro-free trade economy types within the chinese leadership has been the intermediary backwards and forwards to washington in the last couple of months. he gets i won't say disgraced. but it's the importance of his voice being reduced in the future if you're asking me from just the internal chinese read of this, i think we see now a hardening of the position and reassertion of the authority of the hard line. >> no one thinks it's going to last forever though. a lot of these things, eventually they find a way for both sides to save face somehow. maybe if you look in the gritty details, one side actually comes out on the losing end. but i figure there's some way unless we're going to be here

five years from now talking about this there's got to be a way for this to be resolved with both >> that's the question i spoke to the chinese about which is what the hell is the end game. so their assumption, correct me if i'm wrong, and i'm not saying they in the sense i know what xi jingping is thinking not that grand but their conclusion internally is this is going to ride through until the midterms in this country because it's so much part and parcel to president trump's election strategy for the congress, for the house, the senate you watch his speech in montana the other night, it's very much part and parcel of the campaign. >> and then what happens what do you think is going to happen at the midterm? >> well, unlike the russians, they don't have that level of surveillance no, but the point is in six months a whole lot can happen in terms of escalation. on the de-escalation and where the dell ultimately lies, you know, i don't pick up a ready formula from the chinese or

intermediaries as to where the landing point is from their perspective, when they send hua to washington with concessions about six weeks ago, they thought that was about it but now that's been rejected and now we have the formal declaration. their system is tit for tat. >> right but what about the intellectual property in a way that you need to do business in china? do they have no idea that that's not really done and that they're -- >> or do they not care >> they now they steal intellectual property. they know deep down they do some of these things, don't they? >> let me answer both on trade and ip on trade, if you go to the chinese and have a heart to heart conversation about the size of the imbalance with the united states approaching half a trillion, the chinese will say, yeah, we get that. we got to do something about it.

so when i've been speaking to folks in beijing, they say okay let's find a way of managing this imbalance >> but when they say they have to do something about it, what do you think that -- >> administratively that is to ensure they lift imports of u.s. goods. >> we know that part >> but on the other side, ip >> and i know you like that term because you use it, are they then -- are they deniers >> just because you're a climate change denier. that's a different story we'll have a debate on that soon >> that's a terrible word to use in any context other than what it should be but do they deny a way they approach ip? >> they approach ip as legitimate theft from the west given what the west has done to china for a couple of hundred years. >> which is what >> no, no. it's a whole historical thing. i'm not justifying this. you asked me to explain. the historical thing is go back to the opium wars. western exploitation of china. >> that's bizarre.

so they think these things they do now are justified >> i'm explaining to you it's an historically informed mind-set whereby they see these sorts of practices as maybe not desirable, but ultimate payback for a whole series of things which the u.s. and the west have done to the chinese. you know what's going to work against it, though, they go with their own domestic ip industry emerging a lot of innovation in china so there's a lobby emerging about how do we protect our own ip in the international markets. >> because our behavior has given others legitimacy. >> they regard everything else as fair game is it right? no that's the way they see it >> we had a guest on earlier who suggested perhaps this administration' read of what's been happening is completely accurate however, he thought the better way to do it would be to build a coalition of others. to gang up on china and say you

are the outlier and you're the one that needs to conform to our practices. >> i think i might have said it on your program before i don't have a problem with the president's analysis of what's gone wrong in the u.s./china economic relationship. i have a problem in terms of the tactics. because i don't see the end game in terms of removing ourselves from the politics and loss of face then we go to geopolitics. what's happening now is this coalition emerging from the chinese. the europeans, all 28 of them. the canadians and mexicans all of whom spoke with one voice a couple days ago in the world trade organization against america. so what the president's actions is doing is rallying or joining the wagons of everyone else against the united states. the big new force in global economics is china and the question of future standard setting, intellectual property is one the world is

engaging with china. instead what we have is u.s. versus the world i don't think that's the best place for your country to be in. >> prime minister rudd, we want to thank you as always for your time >> thank you when we return, it is jobs friday and the tsa is hiring. kate rogers joins us with a preview. hi, kate >> hi, joe that's right summer holiday travel season is in full swing and the agency is hiring thousands of officers over the next few months we'll tell you much more after the break on "squawk." ♪ ♪ ♪ each day, brings new possibilities. that's why you need a partner dedicated to helping your company reach its goals.

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stay with their families until their 40's. welcome back, everybody. time to find out where the jobs are. for that we head to newark airport in new jersey. that's where kate rogers is standing by. she's going to talk to us about training to be a tsa agent it looks busy there. >> that's right. you know the security lines are longer than ever that's why the tsa are going to be hiring thousands of officers in the next few months we got an inside look at what it takes to train with the agency >> reporter: valeria garcia is a tsa officer in training in georgia. the 22-year-old participated in a two-week program this summer focusing on passenger screenings, customer service, and the impact of explosives

>> three, two, one >> reporter: accuracy is key trainees are instructed on using x ray machines properly, following protocol, and interacting with passengers. >> i think people think we're taught not to care just treat them can you hurry up it's not like that we actually learn to treat passengers with care and respect and try to connect with them >> reporter: after training in georgia, garcia will head home to puerto rico where she's stationed taking lessons from the academy. the threat of another september 11th attack is a great motivator to get things right on the job >> to being able to actually work in the tsa, i feel like i'm giving back. i feel like i'm doing something to avoid that happening again. >> reporter: entry-level pay for those security officers starts at around $35,000 a year and the agency says this is a great entry way into the federal

workforce. back over to you >> thanks so much. good to see you. i would say have fun at the tsa line, but that's almost too many to ask too much to ask. >> kate, is there niceness training do they try to find people that are nicer? >> you know what they're trying they are they're trying coming up when we return, the june jobs report is coming our panel of experts standing by for predictions and reactions to the data of course we're waiting for president trump to tweet at us first. no, that's a joke. here are the futures at this hour dow off about 89 points. back in a moment

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breaking news this hour. the june jobs report just 30 minutes away >> our panel of experts is standing by with everything you need to know we will bring you the numbers and the instant market reaction. plus trade retaliation the u.s. and china slap $34 billion on each other's exports. reactions from both sides of the aisle coming up as the final hour of "squawk box" begins right now. ♪

live from the most powerful city in the world, new york, this is "squawk box. >> good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square. i'm joe kernen along with becky quick and andrew ross sorkin jobs friday. less than 30 minutes to go until the release of the employment report every month we actually do look forward to it it's a good snapshot of what's happening in the economy forecasters expect an increase of 195,000 non-farm payrolls another close to 200,000 which given where the unemployment rate is right now and the available workforce, you figure the unemployment rate will either stay where it is at 3.8% or possibly go lower. because that's more than the -- right? you should still be lowering >> there are more openings than jobs >> maybe there will be some wage gains. there's a lot to look for when

we get the number today. let's get a check on the markets. ahead of the report down about 87 now not the worst levels of the day, but close for the dow. down 12 on the nasdaq. s&p down six treasury yields continue to respond, i think, to some of the trade concerns because we're definitely not at 3.25%. and i don't really think the end of the year, 3.25% is that still -- i think we could be once again comes back down to significantly below the 3% number. >> all right we'll get back to the jobs report in a moment but first let's tell you about today's other top story. that is trade. imposing on $34 billion on imports from china president trump also extending tariffs to all $500 billion of goods imported from that country. beijing says it has no choice but to fight back against what

it calls u.s. bullying on trade. the nation imposing its own 25% tariff on more than 500 u.s. products also worth $34 billion saying it will go tit for tat in this situation we will talk to the ceo of the national association of manufacturers, jay timmons that's coming up at 8:15 eastern time here's what else is happening at this hour. tesla's factory in california is the subject of another probe by california regulators following a safety-related complaint california's occupational safety and health administration acknowledging that it opened a case in late june, but it has not given specific details on that investigation also, northrop grumman lost a bid for a jet nearly three decades ago. check out shares of biogen this morning.

saying a new alzheimer's drug actually succeeded for patients receiving the highest dose biogen is developing this drug in partnership with the japanese company whose shares also surged in trading in tokyo. let's get to our all star jobs panel as we count down to the big number cnbc contributor jared bernstein joins us good morning to you, sir also phil swagel is here good morning to you. and jim paulsen. great to see you, sir. let's get a breakdown. how are you -- i don't want you guys to tell us the numbers because we're going to do that -- we like to stretch this out a bit. >> yeah. i'd like et to get the number before i give you the prediction this time. >> we're going to get to the

predictions. but one of the things that has fascinated us all month is the idea there are more jobs openings out there than people to fill them in. now on the high and low end, we had one guest talking about how they can't find enough people to deal with blockchain and the different types of blockchain work on the other end, even trucking which is so important in terms of getting goods around the country in part because of the opioid crisis that they've struggled to fill those jobs what's going on here >> well, what's going on is we have a tight labor market. we're closing in on full employment but i've maintained that the supply side of the economy is still somewhat unknowable when it comes to the labor force. if you look at the basic calculations as to what it should take to bring the unemployment rate down, most economists will tell you 80,000, 100,000 jobs per month averaged closer to 200,000 that suggests there's a little bit more supply in the system than those job shortage numbers

suggest. but the other key factor there is the wage pressure while it's there, certainly hasn't been like anything we expected given the job shortages that have been discussed. part of that is slow productivity growth. but i think there may be a bit more labor supply in the system than 3.8% suggests >> you agree with that >> i do. i would in some way summarize jard in saying the trump economy is good and it can and looks like it's going to get better. >> i didn't say anything about the trump economy. >> teasing jared here. >> phil, let me ask you the related question which is there's no question that the economy is good today. the question is how sustainable is this kind of activity and this level of activity >> yeah. to be more serious, i do worry about that like jared i think we have some room yet on the supply side of the labor market i look at the u-6, the broader

unemployment rate. we're not down to where we were in 2000 before the tech bubble collapsed. demographics have changed somewhat, but what suggests we have more room to go look, i worry about the risks you've been talking about this morning. the trade risk in some ways the investment uncertainty that the trade risk is causing >> i think jared was serious though this is not the -- he didn't say anything about the trump economy. in fact, a lot of democrats, jared in your view barack obama's still president, right tom perez said that the other day. >> barack obama is not the president? it's very -- to me it's very clear that donald trump is riding a trend he inherited. but i will -- >> i withdraw. i withdraw i just saw tom perez that's his shtick that barack obama is still president >> i'll give trump credit. he has not yet screwed up the e

recovery he inherited. but he's trying to do so with the trade. >> that story is getting less and less plausible but you can keep it up if you want >> jim's been patiently waiting. i want to know what a goldilocks number looks like, a good number, what a bad number for the market looks like given we're playing the game of what will the fed think of all of this >> that's one of the problems the markets have it's hard to find a goldilocks in here. it's a narrow path here. you can be too hot or too cold if i described that, i'd say you get weaker than expected ways. if you get a 0.3% number, that's a 3.6% annualized wage so around 0.2% and i would say if you got a little uptick in the unemployment rate but you combine that with an increase in labor force participation to jared's point about slack in the labor market, i think if you got

that tri-combo, if you will, i think it would put the fed back on its heels a bit and it would allow to look at growth >> you said 3% might be too hot on wages but if we take the fed's 2% inflation target and add a percent for productivity, why isn't 3% sustainable >> well, i think that wages are probably headed towards 3.5% and i think a lot of this is psychological in the markets you know, it's not about what's right or wrong it's about how it's perceived. and if you have a bond yield priced below where that number is, i think that's too low if you've got multiples of 21 times earnings, i think that's too low. it might be sustainable for the fed but not really good for the markets. and it's yet to be demonstrated

whether we get a boost in productivity i'm not sure that's forthcoming. we might sit at the 0.7% we've been running at. and if you continue to grow now with this low of unemployment rate, it's going to aggravate costs more and more. >> okay. gentlemen, we are going to leave it there because we're going to be spending a lot more time on this and with you. so thank you see you in a bit joseph all right. coming up, what about it a trade war and the impact on manufacturers. we're going to talk to the head of the national association of manufacturers on that next and by the way, don't miss full coverage of the unemployment report at 8:30 a.m. eastern time for the numbers, who do we have there today? diana olick. not hampton. stay tuned you're watching "squawk box" on cnbc insurance if you get punished for using it? news flash: nobody's perfect. for drivers with accident forgiveness,

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welcome back to "squawk box. the futures right now indicated

down less than 100 last time we'll have to look there -- here it is. in fact, they've improved. moving into the number itself. maybe the -- people heard diana olick is going to be delivering the news today is she our new hampton >> she might be our new hampton. i don't know if she's our permanent new hampton. >> that's my question. anyway, down now -- hampton pearson retired after a distinguished career s&p 500 down 4.46. and the nasdaq down 5.3. in asia, this was the day everything going into effect but still green. not huge, but green arrows trade tariffs between u.s. and china now official raising concerns about the potential damage the tariffs will have on the economy

joining us now from washington, jay timmons. president and ceo of the national association of manufacturers. jay -- >> morning, joe. >> are you on the record that you think that maybe some of these tariffs were necessary and might actually be beneficial to certain certain parts of the economy? is that where you are? you're like a voice in the wilderness i'll tell you. >> i'm not on the record saying that i can assure you what i am on the record of saying is that china cheats. and we have a serious situation with some of the problems that come out of china. whether that's counterfeiting or intellectual property theft. or state-owned enterprises or dumping. and subsidization. we need to get to the table with china and create a free trade agreement. that's the ultimate solution to this problem >> okay. then do you have a problem with the way we're approaching it >> well, you know what, we've approached it many ways over the

course of the last 20 years. nothing has worked china continues to cheat i don't like tariffs i don't think anybody who manufactures in this country thinks that tariffs are the right solution ultimately. but what i think manufacturers do believe is that we need to get china to the negotiating table right now and create a free trade agreement like china has with many other countries around the world >> see, i wasn't trying to put you in a box i was going to ask you whether, you know, whether cnbc's the only media outlet that would let you actually voice the possibility that this isn't going to be an unmitigated disaster for everyone involved that's what we hear all day long so having you on, i mean, you're basically saying that this may have been something that's necessary after all the cheating i was sort of -- i was giving you the opportunity to make that point. not criticizing you for making it >> joe, i really appreciate the opportunity. but let me just say this

it's called a war for a reason wars are never good. so if we're truly into a trade war at this point and it looks like both sides have fired a shot, it's only going to hurt -- it's only going to hurt obviously manufacturers who i represent. but also consumers >> then you wish we weren't doing it >> absolutely. no, i wish -- listen i wish we could create a rules based system we've been calling for that for a long time at the n.a.m. with china. because china cheats and this administration has taken on a new tactic to try to get china to the negotiating table now is when the rubber hits the road china needs to get to the negotiating table and we need to see results. >> i think the last time we spoke with you, you said, look this is a manufacturing president. president trump is based on what we see, you don't know yet how this is going to go down it will be after the fact that you can decide whether this will be a good move or a bad move

you think that is something that is two months away six months away? a year away? what are you preparing for at this point because most of the reporting we've heard tells us that a lot of manufacturers are still saying that they think this is a negotiating tactic is that where you stand? or have we crossed the rubicon >> i think it is a negotiating ta tactic becky, let me just say the running room we have right now is substantial i do not agree with your previous guest that donald trump somehow inherited something. let's look at what we've accomplished over the course of the last 18 months tax reform, regulatory reform. those have incentivized manufacturers to invest and hreh in this country. 98% are optimistic about the future 87% say they're investing. and 70% say they're hiring those are fantastic numbers that give us a lot of optimism for growth and manufacturing in this

country. but i have to tell you that a trade war doesn't benefit anybody. and manufacturers are concerned about that >> jay, it is consistent though. for eight years the obama administration said the anemic growth was because of the previous administration, the bush administration. so now that we're at 3%, it's only right to say that goes back to the previous administration too. right? at least they're singing the same tune. >> over the course of the obama administration, while that was coming out from the great recession, there was a lot of uncertainty. >> but there was no pro growth where was the pro growth initiatives? where was deregulation other than i don't know they say the auto bailout or t.a.r.p. or something. >> here's what i would give the obama credit for --

>> growing taxes does not grow the economy. >> i will give the obama administration this. they began the process of allowing us to become more energy independent they did not do it fully and i think this administration has. that's one of the reasons you're seeing the growth and the optimism in the manufacturing sector we have got tax policy and regulatory policy. all of those things are great. trade can kip the balance the other way if we're not careful that's why we've got to get to the table. >> they wanted to leave fossil fuels in the ground. they didn't do keystone. then why did you say it was because of of them >> i didn't say it was because of them. i said they started down that track. i'm not going to give them credit for it because this administration did keystone. >> things happened because of

people not in spite of them. >> we were talking about this earlier with mr. rudd. the way the chinese feel about intellectual property and that they don't necessarily look at the current context of the intellectual property as theft they think about it literally in hundred-year terms look at all of these things meaning we the west effectively took and stole from them how do you sell -- do you think we ever get over that? is that even -- this is an interesting way to think about this debate. >> well, if we're going to go back hundreds of years, i think we're going to have some problems i think we need to look at the here and now we need to look at what china is doing today. and it's pretty clear that they're cheating it's clear they're stealing our intellectual property. and so this administration is working hard to get them to the table. i think we've got to make that happen now you know, if we continue to

impose tariffs and have them retaliated -- have the retaliation by china, it's going to escalate into a trade war that benefits no one doesn't benefit consumers, doesn't benefit manufacturers. now's the time to get to the table and negotiate a rules based free trade agreement with china. >> thanks, jay >> thank you coming up in the next half hour, we will continue this conversation about trade we'll be hearing from both sides of the aisle democratic congressman john yarmuth of kentucky. and republican congressman darrell issa we will bring you the jobs numbers in less than ten minutes.

coming up, it's almost time. the june jobs report is just minutes away first, though, predictions from our panel. then we'll take you live to the labor department for the numbers and the instant market reaction. i don't know what we want anymore. >> you want it hot but not too hot. >> just like goldilocks. as we head to break, here's a look at futures. down 72. we'll be right back. why did i want a crest 3d white smile?

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♪ good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square it is jobs friday. time to get predictions from our panel. phillip, let's start with you. what's the number?

>> yeah, i'm an optimist i see a lot of stimulus. some tariffs but not nearly as much as the stimulus i'm looking for 240,000, 250,000 jobs the unemployment to tick down to 3.7% and participation to go up a little bit >> how about wage gains? >> i still see them as contained. so just still under 3% over the 12 months. >> what's your number, jared >> 190,000 on jobs 3.7% on the unemployment rate and 0.3% on wages which takes you to a 2.8% year over year >> you're a trained conomist, jared. you know this stuff inside out that's why it must be painful -- >> i guarantee you -- >> -- for you to watch this playing out. >> i guarantee you i'm within 100,000 in the company's interval on the job. >> you know my point you're good at this. it must be killing you to see it happening. >> i love a strong labor market. >> yeah, okay. okay jim, how about you what's your number >> i'm going 165,000 on the

payroll. i think personal consumption has slowed this last month significantly. consumer confidence rolled over. some employment components were down >> you know what i get it yo ur a stagflation guy. you always talk in your book about higher commodity prices. it just starts happening now we got to go pop we'll be back to you how about you, rick? >> 233,000, joe. and i don't delve into the unemployment rate. i still think the unemployment for real is closer to the u-6. >> leisman, are you still doing work or just pulling this out of your hat >> you know, somewhere in between, actually. 177,000 is my number the model says 177,000. >> you like that pulling it out of your hat? are you nervous? you can always throw in hat. you know what i mean >> no, i don't >> as you're headed towards

colliding with a word you can't say. >> oh, right right. yeah >> work with me. >> i was away for a few days >> i got nobody. >> cut me some slack >> you know, we have someone that is not hampton pearson. it's diana olick she's going to be great at the labor department there she is the numbers, tleez it's time. >> up 213,000 non-farm payrolls increased by 213,000 the unemployment rate rose 4.0%. that's the highest level since march of this year average hourly earnings up 0.2% month to month up 2.7% year over year we did have revisions to both april and may. may revised up from 223,000 to 244,000. and going sector by sector, professional and business

services added 50,000. manufacturing added 36,000 health care up 25,000. construction adding 13,000 the only downside? retail trade lost 22,000 jobs in june that basically offset's may's additions. there was little to no change in wholesale trade. leisure and hospitality, financial activities, and government one note black unemployment which had dropped to 5.9% in may bounced back up to 6.5%. the labor force participation rate was at 62.9%. that's up 0.2% and for rick santelli, the u-6 or real unemployment rate was at 7.8% again, non-farm payrolls increased by 213,000 jobs. back to you. >> way to go, diana. >> those are big shoes she just filled and did it very well >> i saw no evidence of any

nerves whatsoever. >> and we had a goldilocks number.ldilocks number >> look at the market. >> we'll see if it sticks. let's get to reaction from our panel. this guy is so far from go goldiloc goldilocks, paulsen. what's the opposite of goldilocks get off my lawn. what do you think of this number >> i agree i think it's goldilocks. the participation rate went up the unplaemployment rate went u. we had weak wages. i think that's about as good as we're going to get here. i don't know what the bond market is doing, but i imagine it's rallying and this is pretty good for stocks. it even makes you wonder if the fed is on hold a little bit or slowing its trajectory a little bit. >> all right let's move around the room how about -- that's not a room, but around our six box whatever we have how about you, phil? >> i agree i look at the u-6.

it's still up there, right there's room to run. you can look at next month and say look there's still hope for another goldilocks another month from now but i agree with jim this is as good as it gets >> jared, how about you? not a big miss in terms of what you were looking for. >> no, it's a great report i love the 20 basis point pop on the participation rate you know, we're still not seeing the kind of wage growth we might expect at such low unemployment. but it looks like the tick up in unemployment was kind of -- if you have to have it tick up, this is the way you want it. more people coming into the job market i think the tick up in the black unemployment rate was not unexpected but again, it does seem like there's more room to run in this recovery and that looks very good to me i imagine the fed looks at this and says steady as she goes. i don't see anything in here that would normalize the pressure campaign.

>> let's get to rick rick, steve will be following you so feel free to credit the trump administration if you want, rick, in any way you see fit. because you know what's coming after you. >> let me numbers speak for themselves well, here's my interpretation if you actually assumed that the u-6 rate was real unemployment rate, all these issues about why being fully packed in employment which i don't really buy, no wage pressure. to me there's two aspects to this report. i would think it all depends on which shoes you're in on whether it's goldilocks. an average person walking down main street won't be looking at it's -- but i'm excited about the jump in the labor force participation rate that's the ball of wax bringing those 95 million people back, that is the key to really growing this economy in a big way. as far as the jobs are concerned, listen.

anything realover 200,000 isn't really that bad. you remember about four reports ago when that year over year number was 2.9%, how excited the market got we're moving in the wrong direction from that perspective. >> all right, steve. >> what is it you want me to say, joe >> i don't know. you saw the report >> i saw the report. very strong number very strong number >> and >> the goods producing sector is doing quite well at 53,000 positive here. construction, 13 manufacturing up 36. that's good. i want to talk about the rise in the unemployment rate. the first thing i want to caution, these numbers are incredibly volatile. let me tell you what's happened to the workforce the last three months down 236,000, up 12,000, and up 601,000. so you've got to take all of this with a grain of salt saying the workforce is growing modestly let me show you what happened.

minus 239 in april minus 281 in may but 499 in june. you want to be very careful. when diana talked about the black unemployment rate, those numbers are subsets of these numbers. so the volatility in those numbers is even greater. in general the black unemployment rate is down. it's not, perhaps, down quite as much as the latest low number might give you the bottom line is we seem to be attracting some people to the workforce. we also have -- >> that's what i was going to say. you bring them back to tit and that's why the number could go up >> i used to be not interested in the job now i'm interested that changes your categori categorizizati categorizization >> isn't that what we wanted >> it is i want take all these big swings month to month with a grain of salt and take subset of those numbers with a bigger grain of salt.

the job market is healthy. i think what jared says, steady as she goes, i think that's right. with the big question and i want to throw this to rick. rick, when i came into the number here, i had a 0.2% spread of 27 and change it looks like it cropped back up to 28. the next fed rate hike could invert or zero out the curve, rick what's the thinking there about how much that influences fed thinking on the floor there? >> well, on the former, there's little doubt in traders' minds that if you look at past tightenings, 25 basis points slipping in, there's a high probability that various portions of the curve can invert i don't think 10s to 2s would invert on the next quarter point. but it is possible what do traders think? they really believe that it's meaningless with respect to all the history with regard to how close or how that predicts an

oncoming recession we've heard the fed in the minutes kind of hint along those lines. when they during the crisis pretend they knew what the word transparency meant, this is actually a time where they need to be more transparent the real deal. and they need to tell investors that, listen we don't think an inversion of the curve should it occur or when and if it occurs means the same thing because we as an organization intentionally depressed interest rates. we need to make that clear. >> can i have one clarification. it's not just the idea of manipulating interest rates. it's they can't manipulate the long end because -- >> they have they have trillions of dollars of security! they have manipulated the long end. >> but do you agree with the idea, look, as long as you're looking at a german bund that gets you next to nothing, this market is going to look more attractive and foreign dollars or domestic investors are all going to be looking at this as a

more -- a better place to be for people who have to invest in treasuries like insurance companies. >> i couldn't agree more it was ben bernanke's fault. he didn't copyright and it got out. >> i'd like to get back to the job market for a second. i think that one of the things that economists and particularly economists at the fed have to be looking at is the trend job gains of around 200,000 per month. i think if you average out the past three months, that's around where you'd be now, most fed economists, most labor market watchers would have told you if we're truly closing at full employment, that number should be something like half that maybe 150,000. the fact we continue to add month over month on trend suggests that this labor market has more room to run >> jared, it might also suggest that we don't have productivity that everyone was expecting.

>> that's an interesting point, jim. because i think -- that's an interesting point. but i think in the q2 numbers, look at the -- >> that's what it could suggest. we don't have the productivity >> i think you're right about that that was one reason why i lowballed my number. because i think q2 productivity is going to be a lot stronger given the strong output number we're going to have. but i think you're right about that, jim. low productivity is helping to juice job growth >> can i follow up on that jared which is to say that i think with the powell fed, i think these numbers here -- i'm looking at year over year wage growth, this is one of those things looking for a subatomic particle you can see the effect of it out there in terms of how it -- it's very existing. the absence of wage gains is another thing that's going to tell -- or stronger wage gains is going to tell the fed we're not at full employment 2.74% is something they're going

to look at and say there's still room to run here >> you found an example in a real science that's just as nebulous as economic science >> i'm a big reader of physics books, joe. >> a lot of that you can -- can you look at numbers that come true whereas this, i have no idea >> you can and you can't they're still debating economics is not rocket science. it's harder. >> it's rocket surgery >> all right, gentlemen. pretty good number >> without the inflation concerns and scares. >> you're saying we want higher wages. >> i think it was tweet worthy i think it was worth looking forward to this number so now we don't know whether it's going to be -- it's just -- >> i think he's no longer going to tweet at all. >> because he heard you talking. he's afraid you'll call him out.

>> i think he heard kudlow ta s talking. >> thanks to our panel love your jewelry, jared and steve, thanks. when we come back, a trade war is underway officially china striking back at the u.s. with retaliatory tariffs reaction from both sides of the aisle with congressman john yarmuth ancoremadaeld ngssn rrl issa next

welcome back to "squawk box" this morning the jobs report for june out just moments ago let's tell you what happened here it looks like it was a goldilocks number at least for you. u.s. employers adding 213,000 jobs during the month of june. the unemployment rate rising to 4% average hourly earnings were up 0.2%. as we said, futures right now, it's almost inched it got a little bit better, got a little worse >> so we're where we started this morning. >> you think of good news being too good, bad news being too bad. >> that yield continuing to drop our other top story this morning is trade china striking back as the united states goes ahead with tariffs on $34 billion in chinese imports. that became official at 12:01 a.m. tit for tat between the nations would have a big impact on the

districts of our next two guests joining us now is congressman darrell issa he's a republican from the state of california. and democratic congressman john yarmuth from kentucky. just to set this up, let's get this out of the way. congressman yarmuth has said he does not believe that the president's use of national security for tariffs is legitimate he's called it bogus he's also said he would go along with legislation that would rein in the president's power congressman issa has tweeted that on trade, let donald trump do his own work. better yet support it. let's clear the partisan politics out of the way, gentlemen. i'd like to get to what this means for your districts and where we go from here. congressman yarmuth, why don't we start with you? this has been an issue for your district let's talk about what it means >> well, first of all, thanks for having me on everybody has talked about the impact on the bourbon industry which is a huge economic factor both in my district and

throughout the state of kentucky it's an $8 billion industry statewide. i've spoken to everyone in the industry they're very concerned primarily about what this will do to their expanding export business. one distiller said it would raise the cost of his bourbon overseas by 50% which would limit his potential there. one of the impacts that has not been discussed is where the global center of u.p.s it's our largest employer. 22,000 employees in my district. and anything that cuts back on trade affects u.p.s. we have dozens of flights every day that come in from china. i think two-thirds of all the iphones in the world come through our airport. any cutback on trade's going to affect us economically through u.p.s. >> congressman issa, let's talk about that that does have a huge potential for your district as well. just the idea of what's coming through the ports.

describe what it might mean. >> there's no question at all we've become a country in which there are winners and losers in. you know, your previous session just before this one, really that segment came up with a couple of things that are important. first of all, what does it take to get gdp growth and what does it take to get productivity growth if you bring a job back to the united states and it basically is not more or less efficient. it might be less efficient at first as people get used to doing a job that they haven't been doing a new steel mill opens up. a new aluminum foundry opens up. you twaactually don't see an increase -- for americans they're concerned about how much they get paid and whether or not they have a job. so part of what's going on and you see it in the economy is very positive for the person who wants a job and particularly wants a job in industries that

have previously been going away. having said that, there is a transitional disruption that's clear. and, you know, we'll take bourbon for a moment since my good friend and i both are into bourbon. in his case he represents it, in my case i drink it the fact is if china was allowed to put the name kentucky bourbon onto bourbon and sell it, he would have a very different situation as a district. which is they'd be destroying his market around the world, potentially, with the dumping in order to grab that $8 billion market and i think that's one of the challenges is not to look at winners and losers by districts. not to look at it by industries. but look to it as americans broadly. and that's going to be one of the challenges is we can't be for it because we have an aluminum operation we can't be against it because bourbon is protected as a name for kentucky and tennessee >> let's talk about this, congressman issa we have spoken with lots of people including the head of the

national association of manufacturers today who say they still think this is a negotiating tactic is that what you think this is and let's get to where you think the end game is. >> the end game has to be exactly as a -- n.a.m. would have it. it's to be about getting a deal in which real competitiveness is the judge and jury for whether or not you manufacture or produce something in a country china has been dumping, they've been dumping lots of products in my old industries and the electronics industry right now they're doing it in the video products looking at everyone's homes and the ring doorbell and so on they're selling the products below cost in order to capture essentially 100% of the market if we can stop them from unfair trading and do the right thing in the united states to be competitive, we'll get markets -- we'll lose markets. but do it in a fair way. that's where the tactic is important. the world, including the

europeans agree that china has been dumping steel and aluminium and that has to stop that's where the whole process started. over something that the whole world understood china was trying to dominate by dumping and they were producing more than the world could use. >> congressman, we talked to the head who admitted he's concerned about the tactics and whether it spirals out of control i'm assuming you have the same concerns >> exactly i share a lot of sentiment darrell expressed when it comes to china we're in wars with our friends we're in wars with canada. the price of lumber has skyrocketed. the home builders estimate the average home will cost $6,000 more the european union is retaliating, mexico is retaliating. it's a strange way to negotiate. again, to use the national defense argument against a friend like canada is really,

really silly and disenginous but this is an ideological thing on trump's end there are people in the administration who agree. >> there's a reason that the world frienemy was coined. we'll always be friends but fair is fair. let's drop all the tariffs and taxes and go from there. they go wait it's like friends are -- it's true but we're friends but enemies. >> yeah. the best example if you have countries where we have essentially zero tariff and they have a substantial 25% tariffs on the same products, then they're friends but not free traders. here is another point that people don't understand is you may pay more for aluminium when you buy from bahrain, our free

trade partner than china it doesn't mean we're not normalizing the correct place to buy it from based on no dumping. i think, again, this is a tactic but it also is a strategy to reward friends who are, in fact, playing by the rules you see the secretary doing it every day. >> we have to go i wanted to ask you, your name was floated before the job to run the cfpb, are you a supporter of cathy was it a job you wanted? >>some is somebody i support she's capable. it's not a job that i was ever pencilled in for but it certainly one i worked with the senate to try to make better that it was under dodd/frank so i look forward to some real reforms. >> which california are you from dot me i n'rember. >> san diego. >> okay. >> i don't know which one -- >> we have to return

let's get down to the new york stock exchange jim cramer joins us now. close to something for everyone to like in the reporting still over 200 but nothing too hot. >> right i come back to the comments larry kudlow gave, i think which are right. there's no reason to be accelerating the fed put it just

on lock step i did really -- it was interesting what rick santelli said they have a lot of optionalty. they don't seem to use it. it's the right kind of number. i enjoyed the trade discussion i believe this is -- we simply, as a people, seem to be united that the president's position is wrong. i think that it's not. i hear more of it on tv than in reality. i think there are a lot of people that feel thank you for standing up for us. >> all right, jim. we have some silits. anks, jim. see you in a minute. coming up on "squawk on the street."

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you'll only pay $4.95. fidelity. open an account today. time for the kensho stat of the day. ♪ good morning and welcome to "squawk on the street. i'm scott walker with jim cramer live from the new york stock exchange carl and david have the morning off. we take a look at the futures. you take a look and the dow has been over the map this morning it came back positive and now negative by 36 points. nasdaq opened positive by 8 1/2.